Za "Time" from Zagreb
In the case of Agrokor, only one thing is certain for now – Ivica Todorić will be left without majority ownership of the corporation he led for so long. Too slow changes in the way the concern was run, but also some unfavorable factors that he could not influence led him to this situation. By taking a loan, he strongly exposed himself to the bankers, so the real owners of Agrokor become the Russian authorities. Namely, Agrokor's main creditors are Sberbank and VTB, banks owned by the Russian state. From now on, Agrokor is no longer decided by Ivica Todorić but by Vladimir Putin, so the whole story about the collapse of an entrepreneur that employs 60.000 people in the region also acquires a geopolitical dimension.
With the departure of Todorić, his managerial staff also leaves, and the Russians in Zagreb are already looking for new people capable of restructuring the company. The previous staff, in which friends of three generations of the Todorićs predominate, must leave. There are still managers in the concern whose main qualification is that their fathers were associates of Ivica's father, Ante Todorić, in the 70s of the last century, but that kind of personnel policy is over now.
photo: ap...and Croatian Prime Minister Andrej Plenković
A BRIDGE THAT CANNOT BE CROSSED: The dense clientelistic network that has been created for years and which has reached every government, including the current Croatian Government, to which Finance Minister Zdravko Marić came directly from Agrokor, is no longer helping. The otherwise measured Marić protects his former employer. Even when he is confronted with data from a feature-length documentary in the show "Nedjeljom u 2". Gazda, where the director Dario Juričan describes Todorić's path to success and argues that every year Agrokor draws more spring water than it should according to the concession contract signed with the state, Marić laconically replies that "he does not believe that Agrokor would do anything against the law". At the end of last year, the state approved a loan for Agrokor, but that practice is over now.
Božo Petrov, the leader of Most, HDZ's partner in the government, publicly said that the state will get involved in helping Agrokor, but they are not ready to help Ivica Todorić. Most is a new party and is not part of Agrokor's clientelistic network. Their departure from Agrokor, which no Croatian government has had since 1990, became visible in October 2016, when at the premiere of the film Gazda the entire leadership of the party came.
At the beginning of February 2017, HDZ's Minister of State Property Goran Marić dared to publicly call out Agrokor because of the story about the statute of limitations of as much as 27 million euros in the debt of Todorić's company Grafoplast. Through Grafoplast, Todorić manages Smokvica Vela, an island that was once used by the JNA and remains in state ownership, and now members of the Todorić family spend their summers there. Smokvica is permanently closed to the public and bathers are forced off the island, even though Todorić does not have a concession on maritime property. "The Grafoplast company has been using an entire island for years without paying a concession, I really don't understand why no one did anything," Minister Marić said at the time and announced a settlement in the value of collecting the 30 million kunas that did not expire.
Not long after that, the media reported the bad grades of Agrokor's rating published by agencies such as Moody's. The entire structure began to collapse and various other details suddenly surfaced. For example, that Agrokor owes 16 billion kunas (2,1 billion euros) to suppliers. This debt is distributed in the same way as Agrokor's assets - about two-thirds of it goes to Croatia, and the rest to Serbia, Slovenia, Bosnia and Herzegovina. Banks are owed 19 billion, and Agrokor's total debt has reached HRK 45 billion. Allegedly, the tax debt is also large, but the laws do not allow such data to be disclosed publicly. For comparison, Agrokor's total assets are worth around HRK 53 billion, and they ended 2015 with HRK 47,2 billion in revenue, which is 14 percent of Croatia's GDP. The value of Agrokor's bond fell to a quarter of its face value.
GAME OVER: Actually, the story ended much earlier, in June 2014, when Mercator was bought. At the time, the transaction was somewhat treated as a national success, revenge on the Slovenians for blackmailing Croatia's entry into the EU. It was a step into the abyss. Because of Mercator, Todorić raised PIK with German bankers (payment in kind) loan of 485 million euros. Such loans are repaid at once, and these almost half a billion euros will be due in May 2018.
There were opportunities for Agrokor to get out. For years there have been talks about Agrokor's listing on the stock market, about the initial public offering of shares (IPO) that will repay the PIK loan. Too much time was lost, Agrokor missed the opportunity and that, according to insiders, is due to the stubbornness of Ivica Todorić, who holds 97 percent of Agrokor's shares and is unwilling to give up such a large share of ownership, which is why he was left without the saving money that the new co-owners could have brought.
Recently, there have been various signals that something is wrong, because Agrokor has sold several of its less important companies. The reduction of the portfolio was started too late in order to obtain the capital necessary to service the loan obligations. Todorić had offers from Coca-Cola, interested in buying Jamnica, on his table for years. The problem was the price - interested parties offered half a billion euros, the owner asked for 800 million. Now it remains to be seen whether the Russians will be more lenient towards the Americans.
Todorić's era is over. Decades spent at the top of the business skyscraper Cibona and life in a castle on the slopes above Zagreb, where the people around him address him as "president", have left their mark on the behavior of the richest Croat. So far, he has solved all problems with money - he corrupted politicians, flooded the media with paid ads. Newspapers paid for their investing "journalism" by losing the trust of readers, so now there will be neither money nor audience.
Agrokor was not even mentioned in the vast majority of Croatian media for the last 15 years or so. Just half a year ago, when Juričan first showed it at the film festival in Motovun Boss, the correspondent of Croatian Radio and Television openly told him that she was not sure that the feature about his film would be published, having learned from the experiences of previous years when critical stories about Agrokor could not be broadcast on public television. Texts about Boss published on those days in daily newspapers were duly removed from their portals. And now, the daily newspapers publish gossip and gossip about the concern and its owner, while the national television channels publish graphs showing the drastic decline in the value of the corporate bond.
EDGE ON THE WIND: The glass dome has disappeared, Ivica Todorić found himself in a whirlwind. Certain Slavonian tycoons are already saying that they are willing to take over Agrokor's agricultural production; reputable economic analysts now claim that this scenario could have been foreseen long ago; former finance minister Borislav Škegro now suddenly cannot remember that he was the one who signed the state guarantee for 1999 million euros to Agrokor in 31. "The Minister of Finance cannot control every possible item because he signs 150 to 200 documents a day." You have nothing to make a story about," he told a portal. And the mainstream media began to deal with the events from the era of privatization and the subsequent benefits, which they failed to record at the time. If there had been less leniency from the media and politicians towards Agrokor all these years, now so many skeletons would not suddenly fall out of the closet.
The question is who will suffer the most in the whole story. Todorić's dream was destroyed, but part of his acquired wealth remains. Large Croatian companies such as Podravka and Kraš fear that the Agrokor crisis will ruin them. They are afraid that the new, foreign owner will not want to fill Konzum's shelves with their wafers and beef goulash, and foreign chains, which are increasing in number in Croatia, do not care about expensive domestic goods anyway. Those large suppliers are not only afraid of their claims - some allegedly also lent money to Agrokor. If the idea of former finance minister Slavko Linić about the so-called pre-bankruptcy settlement, the institute he inaugurated, all creditors will have to give up a significant part of their claims, and they will receive the rest in the following years.
Small producers, who have no reserves to survive until the situation unfolds, will fare even worse. Due to Agrokor's excessively long payment terms, many of them have already failed, and this could happen to others now. The workers are also in great fear, who, despite the poor wages, know very well that the arrival of a new owner could mean even worse working conditions, and even layoffs.
Finally, the fall of Agrokor could mean the destruction of Croatian agriculture, which is already in a bad state. Due to the destroyed domestic production, Croatia annually imports food for over 2,5 billion dollars and realizes a deficit of 1,5 billion dollars. For example, it is the largest importer of pork meat in the EU. After the opening of the market and entry into the EU, the Croatian food industry, including Agrokor, began to buy raw materials on the world market. Oil, fruit and vegetables arrive from Serbia and some other countries. Annually, the state provides up to three billion kuna in subsidies to agriculture, while the total value of production amounts to just over seven billion kuna. Due to the imprudent policy, the huge subsidies were not conditional on how much something would be produced per hectare, and the motivation of the peasants to produce was destroyed. An exodus is underway in Slavonia, which is mainly heading towards Germany. And now the situation has become even worse. Some peasants are already saying that they will not sow anything because they do not believe that Agrokor will get away with it, and no one else is able to organize a purchasing chain of agricultural products.
And while everything around him is falling apart, Ivica Todorić remains silent. He has not yet spoken out, not even the stories about the collapse of Agrokor and his withdrawal motivated him to stand in front of the cameras, in order to try to calm down all the frightened people with a few sentences. And there are a lot of such, and not only in Croatia.
The author is the author of the book. Gazda about the owner of Agrokor, Ivica Todorić
